A great all-around IP question is raised by Marty Schwimmer. [UPDATE: Note that the link to the words “sites like this one is now to a pretty much dead page.]

Here’s an interesting fact pattern. Who is the source of the jewelry pictured above? This jeweler. Jewelry companies purchase luxury clothes and ‘re-purpose’ the buttons (bearing the logo) into jewelry, and sell them on sites like this one. [Button Jewelry by] Val Colbert[, which manufactures this,] has brought a [declaratory judgment] action against Chanel.

The button designs might be copyrightable, too. If you’re so inclined, you can begin your reading with Lee v A.R.T.

This is law-school-exam-quality stuff. What’s the role of a potential dilution claim here?

Let’s do some issue-spotting, then. Here’s the money quote from the Goldman link:

In our article, Mr. Wilson and I argue that, in the context of the Internet secondary market, whether the distributor is affiliated with the manufacturer is irrelevant as long as the goods are genuine. Courts should apply a presumption of no affiliation between the reseller and the manufacturer, and for any successful Lanham Act claim, actual deception regarding this affiliation should be required. We also propose the elimination of initial interest confusion as a cause of action under the Lanham Act, as well as legislatively strengthening trademark first sale and nominative fair use doctrines, so that making use of those defenses does not create a higher bar to scale when the resale occurs online versus in a brick-and-mortar setting.

Of course, they had me at “no chance of affiliation” but I’ll take a double “kill initial interest confusion and make it practical to defend infringement claims” chaser any time.

The labels we apply to this business can be confusing, and this is true whether we analyze the problem via copyright or via trademark. The claim of the Big Brand Equity player — in this case, Chanel — would hit these points, I imagine:

You didn’t build that — Chanel did. Your jewelry confection would have no value to the consumer and produce no revenue to you if it didn’t integrate not just our product but all the brand messages [trademark] and originality [copyright] Chanel has invested in that object.

You say the consumer won’t be confused [classic trademark] and won’t believe that Chanel has approved, endorsed or is affiliated with [latter-day trademark] you or your product, but how can you say that in an era when the extent of IP enforcement rights are so well articulated?

Finally, your use of our trademark is in connection with fashion-related merchandise. Your “repurposing” argument, Val Colbert, would never impress us — but it would be bad enough if you were repurposing buttons from our clothes on goods that are unrelated to to our market, if such a thing exists. We don’t have to even figure out if such a thing exists, however, because you’ve hardly “repurposed” at all. This stuff is right in our breadbasket, and if anyone’s going to make a Chanel bracelet it’s going to be Chanel… which we already do.

The responses? Maybe Val Colbert says this:

You built it, all right, and you did a nice job doing so. Then we, or our predecessor, bought it. You got paid, and we’ve got the buttons. Thanks!

Your consumer expectations argument proves too much, It would essentially bring the line of where consumers will or won’t be confused to infinity. Decades of brand overreaching, even where it has been successful, shouldn’t effect a change in the law.

You’re forgetting about the heart of the first sale doctrine, Chanel. That doctrine is not in the least offended by use of an IP-encrusted doodad in the same or similar category of goods by a subsequent purchaser as by the original markholder and seller; in fact, it’s more or less the premise of the doctrine. So button it up!

Great pickup, great issues.

Despite my normal orientation, however, on both the law and the litigation reality of it — given, after all, that the Second Circuit and Google aren’t involved — I think Chanel wins this one.

3 Responses to “Val Colbert: Who’s got the button?”

Cases may be imagined where the reconditioning or repair would be so extensive or so basic that it would be a misnomer to call the article by its original name, even though the words “used” or “repaired” were added. [citation omitted] But no such practice is involved here. The repair or reconditioning of the plugs does not give them a new design. It is no more than a restoration, so far as possible, of their original condition. The type marks attached by the manufacturer are determined by the use to which the plug is to be put. But the thread size and size of the cylinder hole into which the plug is fitted are not affected by the reconditioning. The heat range also has relevance to the type marks. And there is evidence that the reconditioned plugs are inferior so far as heat range and other qualities are concerned. But inferiority is expected in most second-hand articles. Indeed, they generally cost the customer less. That is the case here. Inferiority is immaterial, so long as the article is clearly and distinctively sold as repaired or reconditioned, rather than as new. The result is, of course, that the second-hand dealer gets some advantage from the trademark. But, under the rule of Prestonettes, Inc. v. Coty, supra, that is wholly permissible so long as the manufacturer is not identified with the inferior qualities of the product resulting from wear and tear or the reconditioning by the dealer. Full disclosure gives the manufacturer all the protection to which he is entitled.

First of all, even in cases like that, the Court required the reseller to mark the goods clearly as refurbished to insulate the original trademark owner from any inferiority in the goods.

Second, the Court noted that a complete remake would indeed be an infringement, and later cases have found that. For example, I litigated a series of cases for a famous jeweler about watches that had diamonds put on after-market, and that was ruled a “new construction.” See Cartier v. Symbolix, Inc., 386 F. Supp. 2d 354 (S.D.N.Y. 2005), one of my cases, which relied on decisions from the 5th, 9th and 11th Circuits on similar facts.

Someone viewing this jewelry would believe that the item is a Chanel item. That is the only visible mark on what appears to be a bracelet, and Chanel makes bracelets and other jewelry. This would have been an infringement in 1947, so the “decades of enforcement” argument seems pretty thin to me. Ditto first sale — you cannot create something new and rely on the first sale doctrine. All you can do is resell what you got, and maybe refurbish back to new condition or as best as you can get it.

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The question of whether consumers are likely to be confused is the signal inquiry that determines if a trademark infringement claim is valid. This blog is about trademark law, copyright law, free speech (mostly as it relates to the Internet) and legal issues related to blogging.

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